January 23, 2011

China outlines its support for the EU and European integration by offering to buy bonds to assist nations struggling to raise funds in the economist, however, countries taking up these offers should be wary of the political influence that China may in future extract from holding these bonds. China is using soft power to win friends and influence, but I doubt that it would think twice about using this debt as leverage if necessary in the future.
The nations of the EU are certainly not yet bending a knee to China, many remain concerned about cyber espionage and chose to send representatives to the Nobel prize ceremony in Norway (Economist, 13th January, 2011).
Open markets between the EU and China with more trade will do far more good to both China and the EU than China taking on EU debt.

January 15, 2011

A good story from the NY Times explaining the reasons behind China raising interest rates to cool the Chinese economy. The full article goes into detail about the current rate of inflation which is above the government target of 3% as well as the type of price rises that are fuelling rising inflation. China is able to raise interest rate, unlike many other economies, as its economy has weathered the global downturn well and now has too much liquidity. A rise in interest rate also bodes well for the long-term appreciation of the Renminbi.

Visits to both India and Pakistan last week by Chinese Prime Minister Wen Jiabao were far more about developing economic relations than pushing any foreign policy agenda. Especially in light of the fact that India refused to bow to Chinese pressure to not attend the Nobel peace prize ceremony the week before. Chinese friendship with Pakistan is longstanding and embedded, but the deals with the largest financial weight were signed in India in a visit that eschewed mention of the political differences between democratic India and China.
In the case of China this is most likely simply a case of economic aims serving political aims – making sure that the Chinese economy continues to grow to keep the domestic audience satisfied. India equally has no interest in a feud with China over developing economic relations. These objectives were solidified with a joint ambition to double bilateral trade to $100 billion over the next 5 years, without resolving the ongoing border, water or terror issues between the two potential superpowers.

Reading the Economist on an iphone is fantastic. I catch up on the news about China using this app. The Economist app that can be downloaded from the App Store lets even people who have not subscribed to the Economist read the free content from a phone. The really special feature is that subscribers to the Economist, either to the paper copy or the online only version, can access all the articles in an issue from their phone. It is probably the best reader I have used on the iphone, because it downloads content so that it can be viewed offline, the app remembers the article you were reading and where in the article you were when you next open the app after it has been closed. Finally and probably the best feature of all is the audio that allows you to listen to the economist through your phone – this alone probably make the Economist app the best app the iphone will ever have.

The special report on China in the economist published on 4th December, outlining the potential conflicts between the US and China from a rising China, is excellent.  It insightfully explores the geopolitical influences on both China and the US exploring how directly and indirectly these may unfold over the coming decades.

My personal highlight is a very innocuous reference to why the Chinese government is so concerned about protests even those directed at the Japanese, as an anti Japanese protest is cited as the source of the democracy movement in South Korea in the 1960s.  It is the little nuggets of information that allow readers of all generations to benefit from reading the economist.  Not having been around during the 1960s, until I read the special report on China, I would have assumed that the Chinese government would have tacitly supported anti Japanese protests as a potentially healthy outlet for the 40 million plus single men in China that are a result of the one child policy.  Far better to have these young men focus their anger on Japan over their own government.

Having read the economist for over 12 years I cannot recommend it more highly.